In an era of cutthroat competition and diminishing revenues because of the gloomy economic scenario, the competition between technology start-ups and established brands has reached a stage where the former need to innovate and reconfigure their business models if they have to face the competition from the latter. Research has shown that technology start-ups and in particular, those in the emerging sectors of SaaS (Software as a Service) and cloud computing typically have greater gestation periods than established brands. Hence, the need to break even quickly and keep the cash flow going is a big business and financial imperative for these start-ups. Hence, the need to play with the big brands in software and at the same time retain their unique identity is something of a challenge for these start-ups. In this article, we discuss some of the ways in which technology start-ups like CloudMore, CloudSigma, Flexiant, Workbooks can compete with established brands like Microsoft.

Technology start-ups must ensure that the marketing and product delivery aspects are taken care of in an efficient manner if they are to compete with established brands. For instance, if a SaaS vendor or a star-up is providing a product at $65 per user for 10 users and an established brand is providing a similar product at $17,500 plus the 15% annual maintenance cost, it makes sense for customers to switch to the SaaS option because over a three year period, the SaaS product makes for eminent business sense and considering the fact that the product from the established brand needs to be upgraded at the end of three years, many customers might go for the SaaS option. Hence, the point here is that a market exists for technology start-up offerings and it makes sense for these start-ups to focus on marketing to the same customers which were served by the established brand.

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Next, technology start-ups can focus on product delivery in an efficient manner considering the fact that if they offer more end user customization and partner with a reputable hosting provider, they can target the twin imperatives of customizable mass offerings and secure access that are currently the Achilles heel of SaaS companies. To elaborate further, many customers need customization to a certain extent and hence they prefer software made by established brands as these companies are willing to do the customization for them at a price that is affordable. However, the drawback is that such customizations even when discounted eat into the budgets of the customers and hence SaaS with its flexible pricing and by having an open architecture can easily target the customers who would be glad to have the same features at lesser prices. The issue of secure access is something that many customers want and SaaS with its reliance on public internet access makes customers shy away from it because of the reservations many customers have over sharing data on public internet. This can be surmounted by having reputed companies as your hosting partner and hence reassuring the customers that their data is safe. These twin aspects of customizability and secure access are often at the heart of the debate in the customers’ mind about going for SaaS as opposed to going for an established brand.

Finally, SaaS companies must have funding that is assured till they break even and even though the incubation period is more for SaaS start-ups; they must reassure the VCs (Venture Capitalists) and have funders who are not impatient or jittery. Of course, this is easier said than done but there are VCs in the market that have deep pockets provided the business model of these start-ups is solid. And by incorporating some of the points mentioned above in their business models, these SaaS start-ups can convince the VCs of the need to continue funding them till they achieve break even in their revenue streams and start making profits. Another aspect that is often overlooked by many start-ups is the aspect related to legal contracts and clearly defined SLAs (Service Level Agreements) which protect both the customers and the start-ups from any fallout due to either party reneging on the terms and conditions. Clearly defined termination clauses, payment schedules, SLAs and agreements over data loss and privacy can go a long way in making both parties comfortable and not prone to reneging on the promises since the penalties are also more in that case .

In conclusion, the technology start-ups need not fear about the uphill task of taking on established brands and they can compete with them on a level playing field because of the growing tendency among users to consider alternatives that are cost effective as well as technologically superior. Hence, by focusing on appropriate marketing and product delivery as well as having proper contracts in place, these companies can succeed in the uber competitive marketplace.

Preetam Kaushik is a 'prolific' 'professional' freelance writer who has been writing online for the last 5 years and has gained a significant experience in writing articles, blogs and contents online. Much of his expertise lies in the writing world. He writes articles, web content and blogs on various assigned topics under almost no supervision, for various clients across the globe.

Anything that is related to creative writing and requiring the fashioning of blogs, articles or content to make them well packaged for the world wide web inspires him. He is also an avid researcher and a voracious reader.

He has extensive experience writing articles on a freelance basis on Finance, Business, Management, Entrepreneurship, Writing and Publishing, Technology and E-Commerce topics. He also specializes in academic writing which enhances his analytical and research capabilities.

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